Kehinde Fajobi
The National Assembly is considering a bill that proposes raising the Value-Added Tax (VAT) from its current rate of 7.5% to 10% by 2025, and further to 12.5% from 2026 through 2029.
A report by The Cable claimed the move is contained in a bill which is part of broader fiscal reforms aimed at increasing government revenue.
The document outlines that from 2030 onwards, VAT could rise to 15%. It reads: “VAT shall be charged on the value of all taxable supplies at the following rates: (a) 2025 year of assessment, 10%; (b) 2026 to 2029, 12.5%; and (c) 2030 and thereafter, 15%.”
This proposal aligns with earlier statements by Mr. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, who said on May 8, 2024, that VAT rates would need to be increased to meet the country’s fiscal challenges.
In addition to the VAT hike, the bill also proposes a reduction in corporate income tax (CIT), from the current 30% to 27.5% by 2025, and down to 25% by 2026. Companies with a turnover below ₦20 million will remain exempt from CIT.
The bill further specifies that large companies with a turnover of ₦20 billion and above, as well as multinational enterprises (MNE) operating in Nigeria, will be required to pay a minimum effective tax rate of 15%, even if their calculated CIT falls below that threshold.
“Notwithstanding any provision of this Act or any other enactment, where, in any year of assessment, the effective tax rate of a company is less than 15%, such company shall recompute and pay an additional tax that makes its effective tax rate equal to 15%,” the document states.
The government stressed that the proposed reforms are part of efforts by the government to create a more sustainable tax framework while supporting small businesses through exemptions from corporate tax.